Making Cents: Time's critical in financial planning

When it gets right down to it, the most valuable resource in your financial plan is time. Time is one of the few resources that you cannot get back after wasting it.

John P. Napolitano

When it gets right down to it, the most valuable resource in your financial plan is time. Time is one of the few resources that you cannot get back after wasting it.

We all know what happens if you don't get things done on time. If you are late filing your tax return, you pay penalties. If you miss the deadline to fund your retirement plan, you cannot go back and say you're sorry. And if you fail to do an estate plan before you die, your heirs may suffer.

Time is also a critical factor when it comes to investments. Here are two examples.

First is the case of two young college graduates. Let's say that one starts investing in a 401(k) with his first job, right out of college. His roommate, however, has a nice apartment in the city and can't scrape together the money to invest in his retirement plan. Twenty years later, the roommate decides that he had better start saving. While he had a great time early in life, he will never catch up to the roommate with his retirement savings.

The second example is that it takes time, sometimes years, for the effect of compounding to be material enough to really impress. In the early years of a savings plan, earning an impressive 10 percent on investment still looks like a small number. It is common in the early years for investors to get discouraged and either suspend the savings plan or dip into it. If you are at this point, run a forecast showing how much that investment grows in its later years. If you have the patience to wait, the annual growth alone will surely impress you.

To control your time a little better, make a list of all the things you need to do and would like to do during the course of a year, month or week. It's OK to reward yourself first, and get your time off or vacation plans on the calendar early in the year. You probably know from experience that if you wait too long to book your time off, you may not be able to take the specific time that you wanted and that your travel options may become limited.

Apply that process to planning tasks that need to get done. For example, block off a regular chunk of time for matters like reconciling your checkbook or setting up online bill payments. Book the time to find a financial adviser, or get your estate plan done.

Your time is valuable. Enjoy every minute and use your calendar to make sure that you get done what you know needs to be done.

John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com.

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